Tangerine Global ETF Portfolios are the latest addition to Tangerine Bank’s suite of investment products.
These ETF portfolios offer Tangerine clients an opportunity to save on investment fees while holding portfolios that are designed with global diversification in mind.
These two benefits (low fees and diversification) are areas where Canadian robo-advisors like Wealthsimple and Questwealth already excel.
Compared to traditional mutual funds, passively managed ETFs cost a lot less and perform just as well or even better in many cases.
This Tangerine ETF review covers the ETF holdings, fees, risk, rating, and how to purchase them.
Tangerine Global ETF Portfolios
Exchange-Traded Funds (ETFs) are a basket of thousands of stocks and/or bonds that can be purchased as a single fund on stock exchanges. This investment vehicle gives investors access to a wide variety of assets without needing to hold each one individually.
ETFs track a benchmark index and are typically cheaper than mutual funds.
If you are familiar with Tangerine Bank, then you may already know that they have offered index fund portfolios (aka Core Portfolios) since 2008.
These five index mutual fund portfolios have a Management Expense Ratio (MER) of 1.06% and are covered in detail in my Tangerine investment funds review.
The new ETF portfolios are a step up from the core portfolios in that you get the same benefits of simplicity, automatic rebalancing, dividend reinvesting, and diversification while paying even less in fees. Think 0.77% vs 1.06%.
Tangerine Global ETFs are made up of mostly Scotiabank ETFs as well as one from iShares.
These ETFs have been bundled into a mutual fund so investors can enjoy the benefits offered by both investment types.
As of this writing, there are three Tangerine Global ETF portfolios:
- Tangerine Balanced ETF Portfolio
- Tangerine Balanced Growth ETF Portfolio
- Tangerine Equity Growth Portfolio
Depending on your risk tolerance, investment objectives, and how long you plan to stay invested, any of these portfolios may suit your needs.
Tangerine Balanced ETF Portfolio
A balanced portfolio tries to “balance” the risk level of your portfolio by including stocks and bonds in a 50:50 to 60:40 mix.
The Tangerine Balanced ETF Portfolio (INI420) holds stock and bond ETFs in a 60:40 proportion that “increases your potential for growth while maintaining stability.”
It has a low-medium risk rating, and holdings as of June 30, 2021, are:
- Scotia Canadian Bond Index Tracker ETF: 39.48%
- Scotia U.S. Equity Index Tracker ETF: 35.28%
- Scotia International Equity Index Tracker ETF: 15.27%
- iShares Core MSCI Emerging Markets IMI Index ETF: 7.75%
- Scotia Canadian Large Cap Equity Index Tracker ETF: 1.75%
- Cash: 0.48%
This ETF has an MER of 0.77%.
Wondering about what the asset allocation looks like for Canadian, U.S., and international coverage?
The Tangerine Balanced ETF Portfolio held the following asset classes by location as of March 31, 2021:
- Canadian Fixed Income: 40%
- U.S. Equities: 34.4%
- International Equities: 23.6%
- Canadian Equities: 1.7%
Related: Best Brokerage Platforms in Canada.
Tangerine Balanced Growth ETF Portfolio
If you are a little less risk-averse and are open to assuming more risk in exchange for potentially higher returns, this portfolio may be for you. Tangerine’s Balanced Growth ETF Portfolio (INI430) looks a lot like a “Growth portfolio” with 75% stocks and 25% bonds.
Investors who buy this fund can expect increased volatility compared to a “balanced fund” as a result of the higher stock component.
It has a medium risk rating, and ETF holdings as of June 30, 2021, are:
- Scotia U.S. Equity Index Tracker ETF: 43.74%
- Scotia Canadian Bond Index Tracker ETF: 24.48%
- Scotia International Equity Index Tracker ETF: 18.94%
- iShares Core MSCI Emerging Markets IMI Index ETF: 9.61%
- Scotia Canadian Large Cap Equity Index Tracker ETF: 2.17%
- Cash: 1.06%
Tangerine Balanced Growth ETF has an MER of 0.77%.
Again, U.S. stocks have the biggest weight at 42.9%. The other assets are allocated as follows:
- International Equities: 29.4%
- Canadian Equities: 2.1%
- Canadian Fixed Income: 24.9%
Tangerine Equity Growth ETF Portfolio
Investors with a medium to high-risk tolerance and a long investment timeframe may be able to maximize portfolio growth by being fully invested in stocks.
This has its pros and cons. On the positive side, you can expect a higher return over the long term, however, drops in the stock markets also have a more pronounced effect on your portfolio.
This fund is not suitable if you plan on liquidating your assets within the next few years.
The Tangerine Equity Growth ETF Portfolio (INI440) has an MER of 0.77% and a medium-high risk rating.
Its ETF holdings as of June 30, 2021, are:
- Scotia U.S. Equity Index Tracker ETF: 57.82%
- Scotia International Equity Index Tracker: 25.03%
- iShares Core MSCI Emerging Markets IMI Index ETF: 12.70%
- Scotia Canadian Large Cap Equity Index Tracker ETF: 2.87%
- Cash: 1.57%
Given its 100% stock holding, I would actually categorize this fund as an “Aggressive Growth Portfolio.”
Related: Best Investments in Canada.
Tangerine ETF Fees and Performance
It costs 0.77% per year to hold the Tangerine ETFs in your portfolio. This means you pay $77 per year on a $10,000 investment.
Compared to a regular mutual fund, you are saving money on fees.
The MER comprises the management fee, trading costs, administration fees, trailing commissions, and any operating expenses.
If you ever decide to transfer your investments away from Tangerine to another bank, a $125 transfer fee applies.
Performance data for the Tangerine ETF Portfolios will not be available until after one year.
Benefits of Tangerine ETF Portfolios
While these portfolios are technically mutual funds holding ETFs, they offer standard ETF advantages like:
- Lower management fees
- Global diversification (assets from over 45 countries)
Plus the benefits of a mutual fund or passively managed investments by a robo-advisor:
- Automatic rebalancing
- Access to automatic contributions
- Dividend reinvesting
- Low minimum purchase threshold (starts at $25)
Downsides Of Tangerine ETF Portfolios
With an MER of 0.77%, you save money in fees compared to the average mutual fund. That said, further savings are available if you are a DIY investor.
For example, you could get an all-in-one ETF portfolio with a management fee of 0.15% (shaving 0.52% off your annual fees)
The best all-in-one ETFs in Canada can be easily purchased online using brokerage platforms like Wealthsimple Trade and Questrade.
Tangerine ETFs mainly use Scotiabank ETF as it is a wholly-owned subsidiary of the bank.
If you want access to ETFs from providers such as Vanguard or Horizons, you need to look elsewhere.
Lastly, Tangerine does not offer an RESP account. Here are some RESP investment options.
Tangerine ETFs vs. All-in-One ETFs vs. Robo-Advisors
Robo-advisors use low-cost ETFs to build “customized” investment portfolios for investors with varying risk profiles.
You pay 0.60% to 0.75% and have everything done on your behalf.
As already mentioned, do-it-yourself investors can use “one-solution” asset allocation ETFs to avoid the hassle of rebalancing and pay 0.15% to 0.25% in annual fees.
Other fees are incurred with this strategy. Specifically, you pay trading fees when you buy and sell ETFs, and this adds up over time. If you only use a commission-free brokerage platform (e.g. Wealthsimple Trade), you can avoid paying trading commissions.
Questrade also offers free ETF Purchases; however, you pay $4.95 to $9.95 per trade when you sell.
Mutual funds in Canada are expensive, costing an average of 1.98% per year for equity mutual funds.
I compare MER for a $100,000 portfolio below:
| Investment | Annual Fee (MER) | Notes |
| Tangerine ETF | ~ $770 (0.77%) | – |
| Robo-Advisor (Wealthsimple) | ~ $600 (0.60%) | Includes the ETF MER and Wealthsimple’s management fee |
| All-in-One ETF e.g. VGRO | ~ $250 (0.25%) | Does not include trading commissions |
| Equity mutual fund | ~ $1,980 (1.98%) |
Conclusion
Tangerine ETFs are great for investors who plan to invest small contributions regularly. It also works well if you want to automate your investing while saving on costs.
If you already own a Tangerine Investment Fund, you can switch to their ETFs directly from your dashboard.
You may be able to cut your fees even more by using a robo-advisor, and many of them also offer free financial advice, which comes in handy when you have questions about your investments.
For maximum fee savings, the DIY investing route is the way to go.
For this approach to work, you should be comfortable with managing your portfolio, rebalancing it when needed, and must minimize your trading fees.
Here are the no-commission ETF trading platforms in Canada.
Wealthsimple Invest
Professionally managed ETF portfolios
Multiple account types
Auto rebalancing and div reinvesting
Get a $25 bonus with a $500 deposit
Tangerine Global ETF Portfolios Review
Overall
Summary
Tangerine Global ETF Portfolios are its latest investment product. This Tangerine ETF review covers the fees, holdings, performance, and alternatives.
Hi, Tangerine ETF MRE of 0.77% is misleading, they also have a TER of 0.27% bringing the Fund Expenses to 1.04%. If this is the real cost they are not much less expensive. I would appreciate if you can check on this for me as I was considering opening a Tangerine ETF account but I notice this cost and it was confirmed to me by a Tangerine Agent.
Thank you
Gino
As always, thank you for posting such informative articles. I’d love to hear any suggestions you might have on how to move tangerine balanced account holdings elsewhere, to a lower MER rated product without queuing up additional taxes or by possibly transferring in-kind?
@ShellyO: Given that this is a Tangerine proprietary fund, you may not be able to transfer your assets “in kind”. Will likely need to cash in and then re-invest. Just my guess and you could check with Tangerine directly.